By CCN Markets: The Dow Jones looked dead and buried last week after a devastating 800 point decline, but an end-of-week recovery left the stock market on relatively steady footing heading into the second half of August.

For investors, the clear fundamental to watch will be the tone of the Federal Reserve, both in Jerome Powell’s comments at Jackson Hole on August 23rd and the FOMC minutes on August 21st.

FOMC Rebels Could Be the Dow's Best Friend

The Dow rallied last week, erasing a good portion of its heavy losses. | Source: Yahoo Finance

If Dow bulls are going to get what they want, Wednesday’s FOMC minutes may prove insightful.

Should there be rumblings of dovish rebellion at the US central bank, Fed Chair Powell could tailor his comments as such at Jackson Hole. It’s also plausible that an ECB style trap is being laid so that the Fed can provide a Draghi-esque dovish surprise to get the Dow roaring again.

Whatever happens, investors should expect a tweetstorm from President Trump heading into the 23rd.

What Will Powell Say About the Economy?

Given these fundamentals, Powell has shown reluctance to give the trade war too much credibility. The Fed chair’s statements at Jackson Hole could reflect this belief, especially after Trump flinched when the stock market recoiled to his recent tariff threat.

The Fed chief is well aware that the current US administration will want tariffs gone - and the Dow Jones rising - heading into the 2020 election, so he must take that into consideration as he assesses the economic landscape.

Nordea: Trump Trade Truce Could Last Just 10 Days

Speaking of the trade war, economists Martin Enlund and Andreas Steno Larsen at Nordea Research are growing concerned that the mercurial president may lose patience with his latest tariff truce, raising the possibility of severe risks for markets next week.

“While the US President has argued that the new trade truce was put in place to make for a robust Christmas shopping season, extrapolating the half-lives of the past two 'trade truces' the new one may last only 10 days… Maybe this means that he will make matters even worse for Huawei this Monday? Let’s hope not[.]"

Focus on Fed Minutes & Jackson Hole

The coming week is extremely light on US economic data, making the scrutiny on the Fed’s outlook even more severe.